Many of the songs "of the people", that is to say folk songs from rural England, point morals that seem a little odd to modern urban/suburban people and as you say even a little nasty. But you have to think about where they're coming from, so to speak.
I think this folk song speaks to the old Anglo-Saxon people who were put down by the Norman aristocracy - to the unlettered rural folk who worked hard for their living and were looked down upon by the gentry - pointing the moral that the gentry and nobility ("we are lord's children, born in the lofty hall, and you are but a poor maid's child, born in an ox's stall") shouldn't be mean to the poor folk because you never know who you might be talking to.
Think of all the Grimm's Fairy Tales in which the kind child who is polite and helpful to the poor beggar-woman or the starving dog who turns out to be a fairy in disguise.
I think it also says something about the proper use of power, and that children haven't the sense to use it wisely.
As I said, you have to take it as it stands. Medieval folk did not put their religion into a box and just take it out on Sunday -- most went to daily Mass and religion was in everything they did. So the simple country folk saw religion as a matter of daily life -- and it is a bit too coarse for our modern sensibilities.
Many of the songs "of the people", that is to say folk songs from rural England, point morals that seem a little odd to modern urban/suburban people and as you say even a little nasty. But you have to think about where they're coming from, so to speak.None of the morals or motifs that you mention are odd in the least, but that's not the point. "The Bitter Withy" does not utilize for its instructive purposes a make-believe fairy or youthful hero/demigod who has yet to realize and tame his power, but Christ Himself. That's an important point because I think that how we speak of Christ should reflect what we believe about Who He Is, and just what that means for us and for our salvation.
Medieval folk did not put their religion into a box and just take it out on Sunday -- most went to daily Mass and religion was in everything they did.And so it should be with us. Perhaps we need to look very hard at ourselves and at our society, at why we compartmentalize things to such an extent that we separate our faith from our "secular" lives, and how the Gospel can have any meaning at all for us if our faith does not become ingrained into our very beings and manifest itself in every aspect of our lives: Every action, every thought, every breath we take should be for Christ. (Just writing this convicts me of how far I fall short. Lord have mercy, for I am a great sinner.)